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Some questions for the next World Bank president
By Joseph E. Stiglitz Monday, June 18, 2007
Paul Wolfowitz's resignation from the World Bank solved one problem, but brought another to light. When Wolfowitz's name was first mentioned as a candidate to lead the world's premier development bank, the idea that the architect of America's failure in Iraq would be so rewarded was met by incredulity. But President George W. Bush had, from the beginning of his
administration, sought to undermine multilateral institutions and agreements. Wolfowitz's nomination seemed to be part of that effort.
Should Bush, a lame duck president with little support at home and less abroad, now be allowed to appoint the next World Bank president? Bush has already demonstrated his lack of judgment. Why give him another chance?
The arguments against the "old boy" system - by which the United States appoints the head of the World Bank and Europe the head of the International Monetary Fund - are especially compelling today. How effective can the World Bank be in promoting good governance and fighting corruption if its president is chosen in a process that demonstrates flaws in its own governance? How credible will an anti-corruption message be when delivered by an appointee of what is considered one of the most corrupt and incompetent administrations in US history?
Interestingly, as several heads of US congressional committees have pointed out, it is in America's interest for the World Bank to be led by the most qualified person, selected in an open and transparent process, regardless of nationality, gender, or race. This requires a change in how its president is chosen, and, at congressional hearings on the World Bank - the first in 13 years - I, like everyone who testified, called for this key reform.
Presidential appointments to senior posts in the US government are subject to open hearings. Regardless of whether the old boy system is preserved - but especially if it is - the World Bank's board of directors should likewise conduct open hearings on Bush's nominee to succeed Wolfowitz. Here are some of the questions - with some of my hints for the candidate's right
and wrong answers - that it should ask any proposed candidate for the Bank's presidency, including Bush's nominee, Robert Zoellick:
Do you believe that the president of the World Bank should put the interests of developing countries first? Will you press for Europe and the US to eliminate agricultural subsidies? Will you advocate a development round that emphasizes liberalization of labor markets more than capital markets, elimination of non-tariff barriers that keep developing countries' goods out of advanced industrial countries, and abolition of so-called "escalating tariffs," which impede development? Will you be open to research even when that research shows that policies of the advanced industrial countries may, at least in some circumstances, not be in the interests of developing countries?
During James Wolfensohn's presidency of the World Bank, there was a change in philosophy. The institution encouraged research-based policies, even when that research was critical of policies pushed by certain advanced industrial countries and by some in the World Bank. When research showed that certain policies (like agricultural subsidies) were hurting developing countries,
the Bank publicized the findings, helping to redefine the debate.
Will you support the initiative of developing countries to have a development-oriented intellectual property regime? What separates developing from developed countries is not only the gap in resources, but also a gap in knowledge. The World Bank should be viewed, in part, as a Knowledge Bank, and it should advocate reforms that enhance developing countries' access to knowledge. Access to generic medicines is essential if developing countries, with their limited budgets, are to improve the health of the poor. TRIPs, the intellectual property provisions of the Uruguay round, were designed to reduce access to generic medicines - and they succeeded. But as bad as TRIPs are, the bilateral trade agreements that Bush has been pushing are worse.
Any candidate claiming to represent the interests of developing countries must distance himself from these policies.
Will you work to redefine the criteria by which countries get access to funds? Today, money goes to countries that are neither most in need nor can most effectively use it. Complying with current orthodoxies - for example, on privatization and liberalization - can earn you points on "good
governance," and thus increase aid allocations - even when they reduce true aid effectiveness.
Do you think countries that are corrupt should be cut off from funding? If so, will do you so in a consistent way? If not, how should the World Bank respond? Will you support a comprehensive anti-corruption agenda, including closing down secret bank accounts? One of the flaws of Paul Wolfowitz's anti-corruption agenda was that expansion or continuation of aid for
countries favored by the Bush administration, like Iraq or Pakistan, was pushed, regardless of how corrupt they were; while there was little tolerance elsewhere. Problems with Uzbekistan were overlooked - until it fell out of favor with the US.
Likewise, the Bush administration opposed the Organization for Economic Cooperation and Development's initiative to restrict bank secrecy - until it realized that secret bank accounts help finance terrorists. Since then, it has shown that it can close secret bank accounts, but has chosen to do so only for terrorists.
Do you think the World Bank should do more to encourage countries to adopt core labor standards? Not only has the World Bank not been active in promoting these globally agreed standards, there is a concern that it discourages collective bargaining and protections for workers when it talks about "flexible labor markets" and conditions that are conducive to private investment.
The old boy system of choosing the head of the World Bank must go. It has done enough damage. But if the advanced industrial countries that control the Bank refuse to stand by their principles, at least they should give a nod to greater transparency. The world should know what it is getting. Open hearings would be a step in the right direction.
Joseph Stiglitz is a Nobel laureate in economics. His latest book is "Making Globalization Work." THE DAILY STAR publishes this commentary in collaboration with Project Syndicate (c) (www.project-syndicate.org).
By Joseph E. Stiglitz Monday, June 18, 2007
Paul Wolfowitz's resignation from the World Bank solved one problem, but brought another to light. When Wolfowitz's name was first mentioned as a candidate to lead the world's premier development bank, the idea that the architect of America's failure in Iraq would be so rewarded was met by incredulity. But President George W. Bush had, from the beginning of his
administration, sought to undermine multilateral institutions and agreements. Wolfowitz's nomination seemed to be part of that effort.
Should Bush, a lame duck president with little support at home and less abroad, now be allowed to appoint the next World Bank president? Bush has already demonstrated his lack of judgment. Why give him another chance?
The arguments against the "old boy" system - by which the United States appoints the head of the World Bank and Europe the head of the International Monetary Fund - are especially compelling today. How effective can the World Bank be in promoting good governance and fighting corruption if its president is chosen in a process that demonstrates flaws in its own governance? How credible will an anti-corruption message be when delivered by an appointee of what is considered one of the most corrupt and incompetent administrations in US history?
Interestingly, as several heads of US congressional committees have pointed out, it is in America's interest for the World Bank to be led by the most qualified person, selected in an open and transparent process, regardless of nationality, gender, or race. This requires a change in how its president is chosen, and, at congressional hearings on the World Bank - the first in 13 years - I, like everyone who testified, called for this key reform.
Presidential appointments to senior posts in the US government are subject to open hearings. Regardless of whether the old boy system is preserved - but especially if it is - the World Bank's board of directors should likewise conduct open hearings on Bush's nominee to succeed Wolfowitz. Here are some of the questions - with some of my hints for the candidate's right
and wrong answers - that it should ask any proposed candidate for the Bank's presidency, including Bush's nominee, Robert Zoellick:
Do you believe that the president of the World Bank should put the interests of developing countries first? Will you press for Europe and the US to eliminate agricultural subsidies? Will you advocate a development round that emphasizes liberalization of labor markets more than capital markets, elimination of non-tariff barriers that keep developing countries' goods out of advanced industrial countries, and abolition of so-called "escalating tariffs," which impede development? Will you be open to research even when that research shows that policies of the advanced industrial countries may, at least in some circumstances, not be in the interests of developing countries?
During James Wolfensohn's presidency of the World Bank, there was a change in philosophy. The institution encouraged research-based policies, even when that research was critical of policies pushed by certain advanced industrial countries and by some in the World Bank. When research showed that certain policies (like agricultural subsidies) were hurting developing countries,
the Bank publicized the findings, helping to redefine the debate.
Will you support the initiative of developing countries to have a development-oriented intellectual property regime? What separates developing from developed countries is not only the gap in resources, but also a gap in knowledge. The World Bank should be viewed, in part, as a Knowledge Bank, and it should advocate reforms that enhance developing countries' access to knowledge. Access to generic medicines is essential if developing countries, with their limited budgets, are to improve the health of the poor. TRIPs, the intellectual property provisions of the Uruguay round, were designed to reduce access to generic medicines - and they succeeded. But as bad as TRIPs are, the bilateral trade agreements that Bush has been pushing are worse.
Any candidate claiming to represent the interests of developing countries must distance himself from these policies.
Will you work to redefine the criteria by which countries get access to funds? Today, money goes to countries that are neither most in need nor can most effectively use it. Complying with current orthodoxies - for example, on privatization and liberalization - can earn you points on "good
governance," and thus increase aid allocations - even when they reduce true aid effectiveness.
Do you think countries that are corrupt should be cut off from funding? If so, will do you so in a consistent way? If not, how should the World Bank respond? Will you support a comprehensive anti-corruption agenda, including closing down secret bank accounts? One of the flaws of Paul Wolfowitz's anti-corruption agenda was that expansion or continuation of aid for
countries favored by the Bush administration, like Iraq or Pakistan, was pushed, regardless of how corrupt they were; while there was little tolerance elsewhere. Problems with Uzbekistan were overlooked - until it fell out of favor with the US.
Likewise, the Bush administration opposed the Organization for Economic Cooperation and Development's initiative to restrict bank secrecy - until it realized that secret bank accounts help finance terrorists. Since then, it has shown that it can close secret bank accounts, but has chosen to do so only for terrorists.
Do you think the World Bank should do more to encourage countries to adopt core labor standards? Not only has the World Bank not been active in promoting these globally agreed standards, there is a concern that it discourages collective bargaining and protections for workers when it talks about "flexible labor markets" and conditions that are conducive to private investment.
The old boy system of choosing the head of the World Bank must go. It has done enough damage. But if the advanced industrial countries that control the Bank refuse to stand by their principles, at least they should give a nod to greater transparency. The world should know what it is getting. Open hearings would be a step in the right direction.
Joseph Stiglitz is a Nobel laureate in economics. His latest book is "Making Globalization Work." THE DAILY STAR publishes this commentary in collaboration with Project Syndicate (c) (www.project-syndicate.org).
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